How to build a well-diversified mutual fund portfolio for next 10 years? (2024)

FAQs

What is the 75 5 10 rule for diversified mutual funds? ›

Diversified management investment companies have assets that fall within the 75-5-10 rule. A 75-5-10 diversified management investment company will have 75% of its assets in other issuers and cash, no more than 5% of assets in any one company, and no more than 10% ownership of any company's outstanding voting stock.

Normally, a portfolio up to 12 or 13 stocks is good enough to diversify.

Having a mixture of equities (stocks), fixed income investments (bonds), cash and cash equivalents, and real assets including property can help you maintain a well-balanced portfolio. Generally, it's wise to include at least two different asset classes if you want a diversified portfolio.

If you invest Rs. 5,000 per month through SIP for 5 years, assuming 12% return. The estimate total returns will be Rs. 1,12,432 and the estimate future value of your investment will be Rs. 4,12,431.

A good portfolio mix involves diversification across various asset classes, such as stocks, bonds, and cash, based on individual goals and risk tolerance. It balances risk and returns potential, optimising the allocation to achieve financial objectives.

Investing in several different securities within each asset. A diversified portfolio spreads investments around in different securities of the same asset type meaning multiple bonds from different issuers, shares in several companies from different industries, etc.

The average diversified portfolio contains between 20 and 30 stocks. While there is no one-size-fits-all answer to this question, it is influenced by a variety of factors, including your investment horizon, risk tolerance, and current portfolio diversification.

To achieve a diversified portfolio, look for asset classes with low or negative correlations so that if one moves down, the other tends to counteract it. ETFs and mutual funds are easy ways to select asset classes that will diversify your portfolio, but you must be aware of hidden costs and trading commissions.

The risk of a well-diversified portfolio closely approximates the systematic risk of the overall market, and the unsystematic risk of each security has been diversified out of the portfolio.

How many funds should be in a diversified portfolio? ›

We recommend owning a minimum of 15 stocks to reduce the volatility of returns in your overall portfolio. Diversify by Investment Category – Follow the portfolio objective's target recommendation for the proper mix of stocks within the Growth & Income, Growth, and Aggressive categories.

Equity Linked Saving Scheme (ELSS) funds are tailored to provide tax benefits under Section 80C of the Income Tax Act, with a lock-in period of 3 years. The DSP ELSS Tax Saver Fund exemplifies a compelling option for investing an SIP of 2000 for 10 years or more.

The U.S. stock market is considered to offer the highest investment returns over time. Higher returns, however, come with higher risk. Stock prices typically are more volatile than bond prices. Stock prices over shorter time periods are more volatile than stock prices over longer time periods.

Which SIP has the highest return for 10 years? The Kotak Bluechip Fund has shown a noteworthy 14.76% return in 10 years.